Leon Cooperman Gave Students A Tremendous Presentation On Life, Hedge Funds And The Outlook For Markets

Leon Cooperman

Photo: YouTube screengrab

Hedge fund heavyweight Leon Cooperman, the founder of Omega Advisors, recently spoke at Roger Williams University’s Mario J. Gabelli School of Business about his philosophy on life and hedge funds and investing. In case you’re not familiar with his backstory, Cooperman, who is now worth an estimated $2.2 billion, grew up poor in the South Bronx.  

He earned his bachelor’s degree from Hunter College and his MBA from Columbia.

His first job out of college was at Xerox Corporation.  After finishing his MBA, he started at Goldman Sachs where he stayed for 25 years.

Today he runs $6.6 billion Omega Advisors. 

Cooperman, 69, shared his life lessons he’s learned from working in finance.  In terms of his investment outlook, he maintained that the stock market is the best place to be invested right now and that the U.S. economy will continue to grow at a modest pace.    

We’ve included screenshots of his presentation and some of his insights in the slides that follow. [Hat Tip: Jacob Wolinsky at ValueWalk]

Cooperman then details the four observations he tells his kids and grandchildren...

1. 'There is nothing more important than family, the root for you and care about you the most. So stay close to your family under all circumstances.'
2. 'It's great to have friends, but you have to know how to be a friend. Be trusting, friendly and supportive of your friends. Extend yourself whenever you can.'
3. 'Never do anything in life if what you did appeared on the front page of the Wall Street Journal or the New York Times that you would be embarrassed. Live your life as an open book, and that's the best way to.'
4. 'When you've achieved financial security and success share with others less fortunate than yourself.'

Cooperman says it's important to respect people no matter if they're below or above you in life. These are some quotes he really likes...

Because it's so incredibly competitive these days Cooperman says that you should do community service to find a way to distinguish yourself from the next job applicant.

Here's a list of the characteristics Cooperman looks for when he interviews people...

Of all the financial asset classes, Cooperman likes stocks. He then goes on to detail reasons why...

Cooperman explains that the average economic expansion lasts about 5 years (60 months). He thinks that this economic expansion might last longer than average because so many sectors of the economy are still operating below potential given the severity of the recession of '08. He doesn't expect a market decline.

He's relatively optimistic about the economy and expects economic growth to continue.

He says one really important area of the economy is housing.

He says house prices are starting to stabilise. He think that the conditions are right for housing and that's an important underpinning for the economy.

Here he shows how the money supply growth exploded and the Fed's balance sheet has exploded from placing loans onto their books off the banks to give the banks more ability to lend to the private sector. He says we're also dealing with a Federal funds rate that has been zero now for a couple of years.

Cooperman explains that there have been easings from central banks all over the world. He thinks China is in the very early stages of easing. He says that there's a challenge of where to invest your assets and the choices are cash (which he says is zero), U.S government bonds (he says there's hardly a positive return after taxes) and then common stock (he says that's the best place).

He says it's important for value investors to get in the market at the right place because you can be right on your stock pick, but wrong on your entry point and therefore you won't make any money.

Right now, he says the stock market valuation looks appealing. However, he doesn't think returns will be nearly as attractive as they have been historically.

Cooperman says you can find many stocks yielding in excess of bonds.

He thinks with bonds your capital is being confiscated. He says he has no interest in being in government bonds as an alternative to common stocks.

Cooperman says in the last five years we've seen significant selling of equity funds by the public.

He says they're buying bond funds and even though the market is up this year they're continuing to liquidate.

He says if you lower the after tax return on investing you're basically going to lower the amount of investing taking place.

Cooperman says that he made his money by finding things that were cheap. He thinks in the next few years as government around the world need to delever we could remain in a choppy environment.

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